The Watermelon Carnival is Water Valley’s most prized annual celebration. An estimated 20,000 people attend the various events, always set the first weekend in August. The carnival is named among the top 20 festivals in the southeastern United States by the Southeastern Tourism Society. The first carnival was held on Thursday, August 27, 1931. At that time, the entire nation was in the grip of the depression. In Water Valley, a bank had failed, the railroad had pulled out, and unemployment was high. Local businessmen were concerned about the spirit of the townspeople, so they decided to host a carnival to boost morale.

The Watermelon Carnival consisted of a parade, a pageant to name the carnival queen, and a formal ball. Festivities were repeated for nine consecutive years, and then halted with the outbreak of World War II. The Watermelon Carnival lay in dormancy until 1980.